By Ernst & Young Kazakhstan

During a meeting of the Government of the Republic of Kazakhstan (“RK”) on 15 July 2019, the President instructed the Government to resolve the issue of Kazakhstan and foreign employees' remuneration.

In this regard, the Vice-Minister of Labor and Social Protection of the population of the RK reported on planned inspections at entities which have foreigners among their staff. Moreover, the Government of the RK is developing an action plan to prevent violations of labor and migration legislation at entities hiring foreigners.

Among other plan components, we would like to highlight the following initiatives:

• By 15 August 2019 – to analyze the working conditions and wages of employees of foreign companies who are citizens of the RK and to introduce relevant proposals.
• By 1 September 2019 – to organize inspections at entities hiring foreigners to ensure the foreigners are hired legitimately and labor and migration legislation is complied with.
• By 1 October 2019 – to strengthen the work of the commission setting quotas for hiring foreigners, taking into account the situation on the domestic labor market.
• By 1 December 2019 – to tighten the issuance of work permits for foreigner employees of the third and fourth categories by introducing changes to the rules.
• By 1 December 2019 – to amend the Order on the approval of risk assessment criteria and checklists for compliance with labor legislation of the RK by including enterprises hiring over 30 foreigners among the subjective criteria when forming a preventive control list.
• On a semi-annual basis – to take measures to avoid discrepancies in remuneration and work conditions between foreign and local employees.

In addition to the above action plan, the draft Law on the introduction of amendments and additions to certain legislative acts of the RK on labor issues has been completed and is currently being considered by the Parliament of the RK.

Hiring foreigners in the RK involves fulfilling many legislative requirements, both at the foreign specialist work permit application stage, and during the period of his/her work in the RK (visa issues, registration with the migration authorities, etc.). Further, creating unequal working conditions for Kazakhstan and foreign employees and paying the unequal salaries is not allowed.

Non-compliance with the legislation leads to risks not only for the company and the foreign specialist, but also for his/her family, as well as executives of that company.

In light of this news, companies hiring foreign employees are highly recommended to make sure that all necessary documentation is executed in accordance with the requirements of the law and that the required minimum share of local personnel is met not only at the time the work permit application is submitted, but also during the entire period of its validity. It is also recommended to review the current remuneration system and reconcile the job responsibilities, qualifications and KPIs of local and foreign employees to ensure fairness in payment and working conditions.

EY professionals, having wide experience in the above issues, will be happy to assist in identifying the risk areas and drawing up an action plan.

Among others, EY Kazakhstan can provide professional support in the following issues:

• Expatriate remuneration surveys;
• Pay system design, grading;
• Workforce acquisition strategy;
• Immigration audit (health check) to evaluate the approaches applied within the company with respect to immigration documents/procedures aiming at reducing the risk of disputes and possible fines/sanctions arising from current practice;
• Review of employment documents and employment records for their compliance with labor legislation of the RK (HR audit);
• Legal advice and support with labor legislation of the RK.

For further information please contact:

Dinara Tanasheva
Partner, Tax & Law Services Leader for Kazakhstan and Central Asia
Tel.: +7 727 258 5960
Dinara.S.Tanasheva@kz.ey.com Maria Aronikova